FCC Launches Payola Investigation Against Sony/BMG

[b]FCC Plans Payola Investigation[/b] Settlement May Reflect Broad Violation, Commissioner Says By Arshad Mohammed Washington Post Staff Writer Tuesday, August 9, 2005; Page D02 The Federal Communications Commission said yesterday it would investigate Sony BMG Music Entertainment’s payola settlement with New York state to see whether anyone involved broke the FCC’s pay-for-play rules, which can bring civil fines of up to $32,500 per violation. Sony BMG last month agreed to pay $10 million to settle allegations by New York Attorney General Eliot L. Spitzer that some of its workers lavished cash, trips and other bribes on radio stations to get its music on the air. FCC Chairman Kevin J. Martin said he was “very concerned” about the activities that gave rise to Spitzer’s investigation and ordered the commission’s enforcement bureau to study the Sony BMG agreement for “evidence of payola violations.” “While payola may not be a widespread practice in the broadcasting industry, to the extent it is going on, it must stop,” he said in a written statement. “The Commission will not tolerate non-compliance.” Under long-standing FCC rules, people are allowed to pay radio stations to play songs but such payments must be disclosed. The person giving or receiving the payment must disclose this to the broadcaster, who in turn must tell the public when the song is played. An FCC spokesman said the commission’s civil penalties include fines of up to $32,500 per violation by an FCC-licensed radio station. Those that do not have FCC licenses must be formally warned before they can be fined. Criminal penalties, if sought by the Justice Department, can include fines of $10,000 per violation and a year in jail, he said. At a July 25 news conference announcing the settlement with Sony BMG, Spitzer said payola was “pervasive” in the industry and appeared to twit federal regulators for not having investigated, saying: “It would have been good if the FCC had looked at this.” Sony BMG, owned jointly by Germany’s Bertelsmann AG and Japan’s Sony Corp., did not admit or deny Spitzer’s allegations at the time, saying only that some of its workers pursued “wrong and improper” practices to get its music on the air. Yesterday, Sony BMG spokesmen did not return repeated calls for comment. As part of the settlement with Spitzer, Sony BMG agreed to pay $10 million to be distributed by Rockefeller Philanthropy Advisors to nonprofit groups in the state of New York aimed at arts and education. Spitzer said the money will in part benefit independent musicians indirectly frozen out by the alleged payola schemes. At the time, Spitzer said his payola investigation continues into other major music companies, including Universal Music Group, Warner Music Group and EMI Group PLC. FCC Commissioner Jonathan S. Adelstein, a Democrat, said that “this payola scandal may represent the most widespread and flagrant violation of any FCC rules in the history of American broadcasting” and suggested the commission should be more aggressive in fighting it. “The Commission has an affirmative, statutory obligation to enforce federal payola laws, and we should enforce them vigorously,” Adelstein added in a written statement. “The airwaves belong to the public, not the highest bidder.” Source: http://www.washingtonpost.com/wp-dyn/content/article/2005/08/08/AR2005080801388.html